DOE Releases Eagerly Awaited Loan Guarantee Solicitations

Jul 30, 2009 - Stoel Rives

U.S. Energy Secretary Steven Chu announced yesterday that the Department of Energy will provide up to $30 billion in loan guarantees for renewable energy projects. The announcement corresponded with the release of two new loan guarantee solicitations funded through the American Recovery and Reinvestment Act of 2009 (ARRA) and through 2009 appropriations. The long-awaited solicitations provide crucial details regarding the application process for both the legacy loan guarantee program for innovative projects (referred to as the section 1703 program) and a newly established program for projects using proven technologies (referred to as the section 1705 program).

"These investments will be used to create jobs, spur the development of innovative clean energy technologies, and help ensure a smart, strong and secure grid that will deliver renewable power more effectively and reliably," said Secretary Chu. "This administration has set a goal of doubling renewable electricity generation over the next three years. To achieve that goal, we need to accelerate renewable project development by ensuring access to capital for advanced technology projects. We also need a grid that can move clean energy from the places it can be produced to the places where it can be used and that can integrate variable sources of power, like wind and solar."

The first solicitation is for projects that employ innovative energy efficiency, renewable energy, and advanced transmission and distribution technologies. Proposed projects must meet the requisite standards to qualify as "New or Significantly Improved Technologies" as defined in Code of Federal Regulations, Title 10, Chapter II, Part 609. The solicitation provides for a total of $8.5 billion in funding and is to remain open until that amount is fully obligated. The initial due date for applicants is September 14, 2009. The full application is available at http://www.lgprogram.energy.gov/2009-ren-energy-sol.pdf.

The second solicitation is for transmission infrastructure investment projects. Proposed projects need not meet the innovative technology standards of section 1703 but must address the current economic conditions in the nation through the creation of jobs, investment in infrastructure, and facilitation of energy efficiency. The solicitation is designed to provide loan guarantees under section 1705 to support those transmission infrastructure investment projects that are most assured of commencing construction no later than September 30, 2011. This is consistent with ARRA's goal of rapid disbursement of funds to stimulate the economy and will favor transmission projects that are most "shovel-ready." Because transmission projects are typically highly complex with detailed planning and permitting requirements, this will be a crucial constraint for applicants. The solicitation references the approximately $6 billion made available under ARRA to pay the costs of loan guarantees without specifying how many actual guarantees will be made with these funds. The initial due date for applicants is also September 14, 2009. The full solicitation is available at http://www.lgprogram.energy.gov/2009-CPLX-TRANS-sol.pdf.

In the past, the federal loan guarantee program has been plagued by complexities and credit subsidy costs that frustrated its purpose of being an effective source of debt finance for energy projects. In today's credit constrained project finance environment, the program could serve a critical role in funding vital projects. President Obama and Secretary Chu have repeatedly expressed their goal of revamping the program so that it will become a valuable tool in the development of the new energy economy.

Stoel Rives attorneys have extensive experience in the development of energy projects and are already reviewing the solicitations in detail. This analysis of both the section 1703 and section 1705 programs will be included in the upcoming complimentary publication, Show Me the Money: The Law of the Stimulus, second edition. The first edition is currently available for download at http://www.stoel.com/lawofseries.aspx, and the second edition will be available in early August at the same URL.

If you have questions about any of these funding opportunity announcements or other renewable energy issues, or would like to discuss the possibility of your project applying for these or other government funds, please contact:

If you have questions about any of these funding opportunity announcements or other renewable energy issues, or if you would like to discuss the possibility of your project applying for these or other government funds, please contact: